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held to be merely a device to accomplish fraud and therefore actionable, even though they consisted of a promwhere a mortgage company, organized for the purpose of making farm loans through a plan which required one appointed as a local agent of the company to subscribe to a certain number of shares of stock, represented, as an inducement to one to purchase stock and become an agent for the company, that, although it was not fully organized and had not sold all of its stock, and was not quite ready to begin business, yet that it would be ready for business and to accept loans in that territory within about two months from the time the contract was made, and that it would loan to the agent from time to time a proportion of its available funds for loaning purposes. The court said: "If the representation had been in the form of a promise merely that the company would furnish A. J. Buhler money within two months of the date of appointment, it being able at the time and intending to do so, its failure to keep the promise would have been a breach of the contract. The plaintiffs, however, understood and it was the intention of Loftus that they should understandthat the company had then approached a condition of readiness such as to enable it within two months to engage in the business which it was organized to conduct. This was tantamount to an affirmation of a matter in the future as a fact existing at the time the contract was made, and was the inducement upon which he effected the sale of the stock and the execution and delivery of the note and mortgage. It amounted to the suggestion as a fact of that which was not true, by Loftus, who did not believe it to be true, and was therefore a fraud, within the meaning of subdivision 1 of § 4978 of the Revised Codes."

It was held in Fox v. Duffy (1904) 95 App. Div. 202, 88 N. Y. Supp. 401, that a cause of action for fraud was stated by allegations to the effect that the plaintiff owned premises worth a certain sum, and that the defendant, to deceive and defraud her, falsely represented to her that, if she did not sell the premises to him, a third party, who then held a mortgage on the property, would foreclose the same, and that the plaintiff would lose her interest in the property and obtain nothing for it, these representations being

ise or a statement as to a future event.22 But even though the party making the misrepresentations as to made to induce the plaintiff to sell the premises to the defendant, and accomplishing that result, whereas the statements were false, as the defendant knew when he made them. The court said: "The allegation that if the plaintiff did not sell to the defendant the mortgagee would foreclose is not to be construed as a representation of opinion, or as concerning a future event. The plaintiff did not say that, in his opinion, the mortgagee would foreclose, or that the mortgagee intended to foreclose, thereby conveying the idea that it was merely the present disposition of the mortgagee, but he asserted as a fact that the mortgagee had determined to foreclose. It was a positive statement of the mortgagee's decision, and none the less a fact because it was a mental determination, or, as such, possible of change. The foreclosure was a future act, but the determination to foreclose was a present fact of which the foreclosure proceedings were but the outcome."

22 The court in Adams v. Schiffer (1887) 11 Colo. 15, 7 Am. St. Rep. 202, 17 Pac. 21, after stating the rule that nonperformance of a promise is not a fraud or evidence thereof, said that this rule did not obtain in that class of cases where the promise is a device resorted to in order to accomplish the fraud, as where one buys property with the existing intention not to pay for it. This seems to be merely another form of the rule regarding a fraudulent existing intention not to perform a promise. But, in so far as this case might be regarded as supporting the doctrine that a promise made without intent to perform the same may constitute a fraud, it seems to be overruled by other cases in this state. See note 34, infra.

And the rule is laid down in Pocatello Secur. Trust Co. v. Henry (1922) 35 Idaho, 321, 27 A.L.R. 337, 206 Pac. 175, that fraud may be predicated upon the nonperformance of a promise in certain cases, where the promise is the device to accomplish the fraud, the case being one of false representations as to what the vendor of a tract of land would do in the way of improvement of the same, accompanied by statements of fact as to improvements and buildings then under way. See annotation following this case in 27

the future does not believe the same, and the person to whom they are made does believe them, and relies on them A.L.R. 343, also notes 67 and 69, infra, on particular facts.

And the rule that fraud may be predicated upon nonperformance of a promise in certain cases where the promise is the device to accomplish the fraud is laid down also in MillerCahoon Co. v. Wade (1923) 38 Idaho, 484, 221 Pac. 1102, where the selling agent of farm machinery made certain promises regarding repair of the same, which were not kept, there having been prior misrepresentations of fact as to the condition of the machinery, and the sales contract being completed in part on the assurance that further repairs would be made.

And it is said in Rochester Bridge Co. v. McNeill (1919) 188 Ind. 432, 122 N. E. 662, that the rule that actionable fraud cannot be based upon mere expressions of opinion has been qualified until now an expression of an opinion may amount to fraud where it is a mere contrivance of fraud. The case was one where fraud was charged on the part of an employer and an insurance company in procuring the plaintiff, an employee who had sustained an injury, to enter into a contract of settlement, under misrepresentations that his injuries were only temporary and that he would be well in a few days. See, on the facts, annotation following St. Louis-San Francisco R. Co. v. Cauthen, 48 A.L.R. 1447. See also notes 117, 1171, infra.

So, in Daniel v. Daniel (1921) 190 Ky. 210, 226 S. W. 1070, the court quotes and applies the doctrine that fraud may be predicated on nonperformance of a promise where it is a device to accomplish fraud, or where a relation of trust and confidence exists between the parties, or where one is induced to change his position so that he cannot be placed in statu quo and will be seriously damaged unless the promise is fulfilled. In this instance, not only was the promise a device to accomplish the fraud, but the relation of the parties was one of trust and confidence, the case being one where a son purchased at execution sale land belonging to his father, who was of advanced years, and, upon being informed subsequently by the father that he had money to redeem the land, the son agreed to furnish a conveyance to take them to the place

to his injury, it seems that they may be of such a nature that they should be regarded merely as an expression of at which the father erroneously supposed the redemption should be made, the promise being made without intention of fulfilment, and the father relying thereon and not discovering the fraudulent nature of the promise until it was too late for him to make other arrangements for the trip before the redemption period expired.

And where a purchaser of land at a tax sale promised to assign the certificate to the original owner on payment of the amount of his bid and interest thereon, and, relying on this promise, the owner allowed the time for redemption to expire, after which the purchaser refused to assign the certificate and obtained a deed to the property in his own name, it was held in Laing v. McKee (1865) 13 Mich. 124, 87 Am. Dec. 738, that fraud was shown entitling the original owner to a conveyance. The court said: "The facts charged and established show that complainant, relying upon the promise of defendant to assign, neglected to exercise his legal right to redeem, and defendant was thereby enabled to obtain a deed of the lands. It sufficiently appears that complainant would have made the redemption but for the assurances thus made to him, and a fraud has thus been perpetrated upon him, against which he is entitled to relief. It is a matter of no moment whether the fraud was perpetrated by means of a promise upon which he relied, and which the defendant did not intend to keep, or by untrue statements as to existing facts. And it is not necessary for us to decide, in this view of the case, whether the agreement to assign the certificate was or was not void under the Statute of Frauds."

A case somewhat similar to that last cited is Wilson v. Eggleston (1873) 27 Mich. 257, where an owner of property allowed the redemption period to expire on representations that a loan would be made to him to discharge claims against the property, such representations being made by one who was then engaged in purchasing the claims, and who so misled the owner that he did not look elsewhere for the money.

In McElrath v. Electric Invest. Co. (1911) 114 Minn. 358, 131 N. W. 380, the court laid down the rule that false representations, known to be false,

opinion on which fraud cannot be predicated, unless there are special that certain events will be brought about in the future, if intended to create the belief that it was the "then intention" to bring them about, and to be so understood and relied upon, may be the basis of an action for fraud and deceit. And the rule was applied in an action for damages for alleged fraudulent statements made for the purpose of inducing the plaintiffs to enter into a lease of summer-hotel property owned by the defendant, where it was alleged that the defendant falsely and fraudulently represented to the plaintiffs, to induce them to enter into the contract, that a certain traction company would complete its electric railroad and would run cars over the road by a certain time, the defendant being the financial agent of the traction company and having full knowledge of its plans, and the truthfulness or falsity of the representations being peculiarly within its knowledge, whereas the plaintiffs had no means of knowledge regarding the same.

It was held in Sweet v. Kimball (1896) 166 Mass. 332, 55 Am. St. Rep. 406, 44 N. E. 243, that fraud was shown in the use of promises as a device by a creditor to lure the debtor into the state for the purpose of arresting him and extorting from him a pecuniary advantage, where the alleged false representations were that, if the debtor would come into the state, he would be assisted by the creditor in securing acceptance by other creditors of an offer of compromise. It was contended that the misrepresentations could not be fraudulent as they related wholly to the future and amounted to a contract or nothing; but the court said: "The fraud intended is not the failure of the representations to come true, or, in other words, the failure of the defendant to keep his promise. What is meant is that the defendant's promises purported to be made for ordinary business reasons, or from good will to the plaintiff, whereas in fact they were made as a device to lure the plaintiff into the state. Probably it is meant, further, that there was a fraudulent misrepresentation of the defendant's intention to keep his his promises. Whether there is more difficulty in the way of treating any misrepresentation of intent to perform a contract as a

circumstances, as superior knowledge on the part of the person making the fraud and a tort than there is with regard to representations of intent in general, or intent to pay the price of goods in particular, it is unnecessary to consider, since we are of opinion that the use of the promises as a device, as above explained, is a sufficient fraud."

Planters Bank & T. Co. v. Yelverton (1923) 185 N. C. 314, 117 S. E. 229, in which the court said that as a general rule fraud cannot be predicated upon promissory representations, because a promise to perform an act in the future is not in the legal sense a representation, but that it may be predicated upon the nonperformance of a promise when the promise is a device to accomplish the fraud, was a case of fraud inducing execution of a note for stock subscription, consisting in representations that the maker of the note would never be called on for any money, but that the note would be held until after a certain date, when certain stock of the company would be offered for sale to discharge the note. See notes 83 and 135, infra.

In Kritzer v. Moffat (1925) 136 Wash. 410, 44 A.L.R. 681, 240 Pac. 355, the court said it was contended that a promissory statement cannot be the basis of an action for deceit, and that the statements in question were of that sort; but that this doctrine is true only to a limited extent; that a fraudulent promise which induces a person to act in such a way as to affect his legal right, or to alter his position to his injury, is actionable. The case is

one, on its facts, within the principle that fraud may be predicated on promises made without intention of performance.

The doctrine that where the misrepresentation is used merely as a device to defraud, the representor or promisor cannot avoid liability on the ground that it related to a promise or future event, is supported by the conclusions reached in various cases which are set out under VII. infra, in stating applications of the rules on the present subject, and in other subdivisions of the annotation. See, for example, Murray v. Tolman (III.) and other cases set out in note 86, infra; Nickle v. Reeder (Okla.)_set out in note 77, infra; Cooper v. Ft. Smith & W. R. Co. (1909) 23 Okla. 139, 99 Pac. 785, and other cases set out in

representations, confidential relations,

etc.23

One court has stated that, of all the attempted definitions of fraud to be found, it seems that none are more satisfactory or instructive than merely to say that fraud is unfair dealing; and that when, through inducements held out by one person, even only by means of a promise, another person is influenced to change his position so that he cannot be placed in statu quo, and will be seriously damaged unless the promise is fulfilled, then the refusal to perform is fraud.24 But this seems too broad a view, unless it is interpreted in the light of the particular facts of the case.

While the Missouri court has taken

note 95, infra; Smith v. Griswold (Cr.) set out in note 42, infra; Koehler v. Dennison (Or.) set out in note 77, infra; Williams v. Kerr (Pa.) set out in note 74, infra; Starnes v. Motsinger (Tex.) set out in note 65, infra; Collinson v. Jefferies (Tex.) set out in note 118, infra; Buena Vista v. Billmyer (W. Va.) set out in note 42, infra. See also note 1431, infra.

23 Thus, in Belmont Min. Co. v. Rogers (1895) 10 Ohio C. C. 305, 6 Ohio C. D. 619, where the misrepresentations alleged were as to the value and future productiveness of a gold mine, inducing the purchase thereof by the plaintiff, the representations being that the mine was a good and valuable one and that the products from it would be so great that, after the initial cash payment, the purchaser would have to pay nothing, but could make the deferred payments from the products of the mine, the court said that these representations were nothing more than a mere expression of opinion, and that, even if the representor did not believe what he said, and the plaintiff did, he had no claim against the former on this account.

24 In Metcalf v. Hart (1891) 3 Wyo. 514, 31 Am. St. Rep. 132, 27 Pac. 900, 31 Pac. 407, a party who had made a desert-land entry, in order to encourage the building of a town on the land, promised that, upon acquiring title, he would sell and convey to each resident who had made improvements thereon that portion occupied by the improvements at a nominal price. The complainant, having made improvements

the view that fraud cannot be predicated on an unfulfilled promise, even though at the time it was made there was an intention not to perform it, this doctrine has been limited in its scope to promissory statements, and has been held not to apply to a misrepresentation of intention or purpose, which the court has regarded as a statement of fact.25 And while in New York there are earlier authorities to the effect that a mere promise to perform something in the future will not amount to a fraud, even though there was at the time an intention not to perform the same, yet the court declined to apply the doctrine where the false representation was of an existing intention or state of mind,26 and the doc

on the land, sought to enforce conveyance, in accordance with the promise. The court held that the complainant was entitled to relief, to the extent of the value of his improvements.

25 Thus, in Metropolitan Paving Co. v. Brown-Crummer Invest. Co. (1925) 309 Mo. 638, 274 S. W. 815, while the court says it is true that a promise to do a certain thing, with a present intention not to do it, is not actionable, it is stated, also, that it has been held that a state of mind may be misrepresented and thus constitute a misrepresentation of fact; that a false statement of a present purpose may be a misstatement of a fact; and that the cases show that misrepresentation of a present purpose or of a present existing opinion or a present state of mind, where it is represented as an existing fact, is material, and when it induces one to part with his property or. to act to his injury, it is a misrepresentation of an existing fact, and is actionable. The rule was applied to a case where a bank misrepresented the purpose for which it desired an assignment of a contract.

26 In Adams v. Gillig (1910) 199 N. Y. 314, 32 L.R.A. (N.S.) 127, 92 N. E. 670, 20 Ann. Cas. 910, the court held that a false statement by the purchaser of a lot as to his existing intention with regard to the intended use of the property was such a fraud as would justify cancelation of a deed made in reliance thereon, when the use to which the lot was actually to be put would greatly depreciate the value of the remaining property of the grantIt was said: "A promise as such

or.

to be enforceable, must be based upon a consideration, and it must be put in such form as to be available under the rules relating to contracts and the admission of evidence relating thereto. It may include a present intention, but, as it also relates to the future, it can only be enforced as a promise under the general rules relating to contracts. A mere statement of intention is a different thing. It is not the basis of an action on contract. It may in good faith be changed without affecting the obligations of the parties. A statement of intention does not relate to a fact that has a corporal and physical existence, but to a material and existing fact, nevertheless not amounting to a promise, but which, as in the case under discussion, affects and determines important transactions. The question here under discussion is not affected by the rules relating to the admission of testimony. As it was not promissory and contractual in its nature, there is nothing in the rules of evidence to prevent oral proof of the representations made by the defendant to the plaintiff. In an action brought expressly upon a fraud, oral evidence of facts to show the fraud is admissible. Pom. Eq. Jur. § 889.

. . We are of the opinion that the false statements made by the defendant of his intention should, under the circumstances of this case, be deemed to be a statement of a material, existing fact of which the court will lay hold for the purpose of defeating the wrong that would otherwise be consummated thereby." And the court observed, further, that it had not overlooked the authority in that and other states in which the court had under consideration representations which were promissory and contractual in their nature, and which, if enforced at all, could only be enforced under the rules relating to contracts.

Following the above case, the court held in Ritzwoller v. Lurie (1919) 225 N. Y. 464, 122 N. E. 634 (an action to rescind a subscription for stock of a corporation on the ground of fraudulent representations inducing the subscription), that a cause of action was stated by allegations to the effect that the plaintiff was in the employ of a partnership composed of the defendant and another person; that the defendant represented to the plaintiff that a corporation was to be formed to take over the business, with a capital stock of a specified sum, which was

to be paid in full in cash and property; and that the employees were to take stock in the corporation and pay for the same in cash; that in reliance on these representations the plaintiff subscribed for a certain number of shares of stock, paying to the defendant a specified sum to be turned over by him to the corporation when organized; that, at the time the defendant represented that subscriptions were to be paid in cash and property, he knew that this was not true, and intentionally and falsely misrepresented these facts to the plaintiff. The court said: "While the representations of the individual defendant through which plaintiff was induced to subscribe for stock and enter into the contract of employment related to something which was to occur in the future in the way of organization of the corporation and payment for its stock in full with property and cash, we think the allegations in the complaint describe a case where a defendant has fraudulently and positively, as with personal knowledge, stated that something was to be done, when he knew all the time it was not to be done and that his representations were false. It is not a case of prophecy and prediction of something which it is merely hoped or expected will occur, when the party making the affirmation knows perfectly well that no such thing is to occur. Such statements and representations, when false, are actionable within the authority of Adams v. Gillig (N. Y.) supra."

And, relying on the Gillig Case (N. Y.) supra, the court in Kennedy v. Spilka (1911) 72 Misc. 89, 129 N. Y. Supp. 390, held that it was a defense to a note, in the hands of the original payee, that the same was given without consideration for the accommodation of the payee, on his express representation that he intended to use it for a specific purpose, namely, the purchase of stock, which representation was false and known by the payee to be false when made, the note being diverted by the payee to another purpose.

The rule that a misrepresentation of an existing intention is a misrepresentation of a fact on which fraud may be predicated was applied, also, in Gabriel v. Graham (1915) 168 App. Div. 847, 154 N. Y. Supp. 493, where an employee of a brokerage house represented to one of its customers that he and his brother were about to enter

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